A while ago, I wrote about the persistence of racial income inequality in the United States. Over the last forty years, Black workers have been stuck making about 20 to 30 percent less than white workers. In fact, there has been almost no progress towards racial equality. And Hispanic workers aren’t doing any better — their wage gap is also about 30 percent. I’ve got some bad news (what else is new). The Coronavirus ain’t going to make this inequality any better. (Man, is my third grade teacher going to be pissed I used the word “ain’t.”)
The reasons are numerous. First, Black and Hispanic workers are more likely than white workers to be in immediately affected industries. Black and Hispanic workers are also much more likely to be paid hourly. Hourly pay means that time working less is also time earning less. Second, Black and Hispanic workers are less likely than white workers to have savings to fall back on. And finally, Black and Hispanic individuals are more vulnerable to the disease, living with more pre-existing health conditions and in more dense areas. Don’t believe me? Let’s look at the data.
Vulnerable, and Paid Hourly
If we think about the industries shut down by the response to the Coronavirus, a few spring to mind. These industries are: 1) retail trade; 2) arts, entertainment, and recreation; 3) accommodation; and 4) food services and drinking places. Other industries are affected of course, but these four jump out at me. These industries comprise nearly 20 percent of the U.S. workforce. Hence, the economic wreckage being caused by the shutdown.
Black and Hispanic workers are disproportionately represented in these industries. While about 18.7 percent of white workers are employed in these industries, about 20.1 percent of Black workers are and 22.6 percent of Hispanic workers are. So, one reason Black and Hispanic workers are more vulnerable to the economic carnage is because they are more likely to work in industries impacted immediately.
But, another reason is less obvious. Across industries, Black and Hispanic workers are more likely to be paid hourly than white workers. Hourly pay has its advantages, like the availability of overtime. However, hourly jobs generally pay less and also have higher variability of pay. Especially when a virus comes along and cuts the amount of time everyone is working. A salaried worker may have the luxury of binge watching Season 72 of The Bachelor while getting paid working from home. An hourly worker has to sit at home and watch it for free. Figure 1 illustrates this disparity in hourly pay.
Figure 1. Share of Workers Being Paid Hourly, 2018
So, Black and Hispanic workers are disproportionately likely to be in industries affected. And, even if they’re not, any reduction in time working is going to result in a reduction in pay. It would be nice if Black and Hispanic workers were also more likely to have some savings to fall back on. And, it would be nice if this blog were as popular as Season 72 of the Bachelor. We can dream.
The Savings Gap
The Financial Industry Regulatory Authority does an annual survey of households’ financial capability. In that survey, they ask several questions about the availability of emergency funds. For example, the survey asks about the availability of a “rainy day” fund. According to the survey, such a fund “would cover your expenses for 3 months, in case of sickness, job loss, economic downturn, or other emergencies.” Man does that description hit a bit too close to home.
In addition, the survey also asks about the ability to come up with $2,000 if needed and the availability of a retirement funds. Presumably, $2,000 could be useful in an emergency. And, retirement funds have also become more useful as an emergency fund, thanks to the CARES Act.
Although the survey doesn’t ask questions specific enough to identify Black and Hispanic individuals, it does allow a distinction between white people and people of color. Figure 2 shows inequality in the measures of emergency funds mentioned.
Figure 2. Presence of Emergency Funds between White and Nonwhite Households
Of course, the lack of savings probably stems mainly from a lack of income in the first place. As I said at the beginning of the post, Black and Hispanic workers make much less than white workers. And, as Figure 3 shows, there is a strong relationship between household income and having a “rainy day” fund. As is often the case, those who most need emergency funds are least likely to have them.
Figure 3. Share of Households with a Rainy Day Fund, by Household Income
So, Black and Hispanic individuals approached the Coronavirus crisis in more vulnerable employment situations and with less money to fall back on. But, while these inequalities are economic, they mirror other inequalities with more dire consequences.
Less Healthy, and More Crowded
In addition to being more economically vulnerable to the Coronavirus, Black and Hispanic individuals are also more vulnerable from a health perspective. First, of all the virus seems to be most dangerous to those in poor health. And, a wide array of studies have documented health inequalities between Black and Hispanic people and white people.
Indeed, this health inequality is easy enough to see, just by asking people about their health. Figure 4 shows the share of people who say their health is fair or poor as opposed to good, very good, or excellent. A gap exists at all ages, and gets larger at older ages.
Figure 4. Share of People Reporting Fair or Poor Health, by Race, Ethnicity, and Age
Of course, for the virus to do damage to Black and Hispanic people, they have to catch it first. And, here they find themselves at a real disadvantage. For a variety of reasons, from low-income to ongoing discrimination, Black and Hispanic workers are segregated into much denser areas than their white counterparts. Figure 5 shows the population-weighted density per square mile for the three groups of individuals, by age. Once again, a gap exists at all ages. And, once again, the gap widens with age — exactly when Coronavirus is most dangerous.
Figure 5. Average Population-Weighted Density Per Square Mile from 2010 Census, by Race/Ethnicity
From the above, it should be clear that Black and Hispanic individuals entered this crisis vulnerable. Economically, Black and Hispanic workers were more likely to be in the sectors affected first, and more likely to be paid hourly. To them, lost time at work is lost money. That would be fine if savings were usually there. But, the majority of nonwhite workers don’t have a rainy day fund.
Health wise, years of economic disadvantage leave Black and Hispanic individuals in poor health. And, higher population density makes Black and Hispanic individuals more likely to catch the virus. Furthermore, both of these trends are exaggerated at older ages, when the virus is most deadly. It should come as no surprise that the disease is disproportionately killing these groups.
While it is too late to address the inequities that existed leading up to this crisis, it is certainly a good time to reflect on what we can do better in the future. After all, when society allows persistent inequality, the suffering is there in the best of times. But, when the storm comes, it quickly becomes a matter of life and death.